Fiber deployments
U.S. cable commercial revenue to grow 6% in 2022; Comcast Optical Network Architecture; HFC vs Fiber
U.S. cable multi-service operators (MSO’s) now generate more than $20 billion a year in business services revenues as the sector has emerged as one of the most profitable for the industry. However, cablecos face major challenges in maintaining their growth pace because of the economic meltdown wrought by COVID-19 and the emergence of new all-fiber and wireless competitors.
Cable business service revenues and customer growth each slowed during the first two years of the COVID-19 pandemic, but they are clearly increasing again at the end of 2022.
U.S. cablecos commercial revenue growth is set to hit 6% in 2022, up from just 2% in 2020 and 3% in 2021, Alan Breznick, cable/video practice leader at Light Reading and a Heavy Reading analyst said in opening remarks at Light Reading’s 16th-annual CABLE NEXT-GEN BUSINESS SERVICES DIGITAL SYMPOSIUM, which focused on cable business services. [The source of that data is CMG/S&P.]
“There are signs of things pointing up again for the [cable] industry,” Breznick told the virtual audience.
U.S. cable is expected to bring in $20.5 billion in total commercial services revenues in 2022. Broken down by segment, small businesses (up to 19 employees), at $14.6 billion, will continue to represent the lion’s share, followed by medium businesses (20-99 employees), at $3.3 billion, and large businesses (100-plus employees), at $2.6 billion.
Commercial customer growth is estimated to reach 5% in 2022, down slightly from 2021 levels, but almost doubling the growth rate seen in 2020, when businesses across the country were hit by pandemic-driven shutdowns and lockdowns. Breznick estimates that US cable has about 5.5 million commercial customers.
Christopher Boone, senior VP of business services and emerging markets at Cable One, acknowledged that the commercial services market is returning to a faster rate of growth. However, businesses – and smaller businesses, particularly – are feeling labor and inflationary pressure as things continue to open up.
“Everything is expensive, including labor, and it’s hard to find [workers],” Boone explained. “For the small business owner, I think it’s pretty tough right now.”
During the earlier phases of the pandemic, Boone said Cable One didn’t emphasize new work-from-home products but instead focused on the broader customer experience. For example, Cable One put some customers on a seasonable pause for the first time, forgave early termination fees, issued credits and, where appropriate, helped customers move to lower-level services.
“We really threw the rulebook out and just said, do what it takes to take care of the customers,” he said. Even if some small businesses fail, the hope is that those entrepreneurs will return and choose Cable One again, remembering that the company did right by them when times were tough. Moving forward, he said Cable One will stick to its knitting and focus on connectivity rather than look to expand its product line for the business segment.
“I think our product menu needs to look like In-N-Out and not The Cheesecake Factory,” Boone said, noting that Cable One has opted to sit on the sidelines with product categories such as SD-WAN. “We’re pretty cautious in terms of new product launches … We feel that connectivity is really our sweet spot.”
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Comcast Business now serves, small, mid-range and enterprise-level customers with a variety of services including Metro Ethernet, wavelength services and Direct Internet Access. An important piece of the firm’s broader strategy revolves around a “unified optical network architecture” initiative that enables the MSO to serve a broad range of customer types, including those requiring that services are delivered to multiple locations in multiple markets.
Comcast’s unified optical architecture combines the access and metro optical networks using a set of items: network terminating equipment (NTE), a Wave Integration Shelf (WIS) and OTN (Optical Transport Network – ITU standard) “tails.”
The NTE is a small, optical shelf that today supports 10-Gig and 100-Gig up to a 400-Gig wavelength, and can reside at a single customer site or a data center. The WIS resides in the Comcast headend or hub, co-located with the metro optical line system, and serves as the demarcation point for commercial services. The OTN Tails are the key to connecting the access network to the metro network.
“We needed a way to provide commercial services to customers that were located in the access [network], but needed to reach the metro network to get to one of our routers for Internet access or possibly another segment of the access to connect their locations together,” Stephen Ruppa, senior principal engineer, optical architecture for Comcast’s TPX (technology, product and experience) unit, said this week during his keynote presentation.
The combining/meshing of the access and metro networks enables features such as remote management, performance monitoring data, alarming and a full “end-to-end circuit view,” including the customer sites themselves. “We use the same hardware, standards, configurations, designs, procurement, processes … in all the networks, regardless of the vendor,” Ruppa said.
And while there was once little need to connect two non-Comcast sites that resided in different areas or to provide connections greater than 10 Gbit/s, customer demands have changed. Ruppa said two products drove that demand and the desire to create the company’s unified optical architecture: wavelength services and high-bandwidth Metro Ethernet.
A modular, simplified, commoditized and easily repeatable architecture enables Comcast Business to “easily offer the next gen of 400-Gig wavelengths and Ethernet services with a very light lift,” he added.
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Ed Harstead, Lead Technology Strategist, Chief Technology Office, Fixed Networks, Nokia presented the final keynote.
The panel session “Fighting Fiber with Fiber” was moderated by Breznick with panelists:
- Christian Nascimento, VP, Product Management & Strategy, Comcast Business
- Brian Rose, Assistant VP, Product Internet, Networking & Carrier Services. Cox Communications
- Steve Begg, VP/GM, Business Services, Armstrong Business Solutions
- Mark Chinn, Partner, CMG Partners
- Ed Harstead, Lead Technology Strategist, Chief Technology Office, Fixed Networks, Nokia
Decades old hybrid fiber-coax networks (HFC) drive fiber to the node outside of the premises, which is then hooked up using older cable (coaxial) technology. However, due to advances in cable technology such as the latest DOCSIS 4.0 technology, the cable industry has touted its newly developed technological capacity to support multi-gig symmetrical speeds over those hybrid networks. DOCSIS 4.0 currently supports speeds of up to 10 Gigabits (Gbps) per second download and 6 Gbps upload – its predecessor, DOCSIS 3.1, offered only 5 Gbps * 1.5 Gbps.
Christian Nascimento of Comcast stated that hybrid networks that deliver multi-gigabit speeds are “adequate” for smaller enterprises. “This is matter of matching the technology up with…the customer’s needs,” he said, adding that Comcast delivers these services in a “cost-effective way.”
For Cox Communications, the hybrid model is “an ‘and,’ not an ‘or,’” said Brian Rose, the assistant vice president of product internet for the cable company. While Cox may invest more heavily in fiber networks going forward, Rose said it will continue to invest in its cable networks as well. Rose said he welcomes market challenges from insurgent fiber deployers. “Competition is good for customers and the industry overall,” he said. “It pushes people to be better and to push the envelope.”
The panel wasn’t unanimously bullish on older cable technology, however. Ed Harstead of Nokia argued that a widespread transition to fiber is inevitable. “I don’t doubt that mom-and-pop businesses will be perfectly fine on [cable]. But to the extent that you need higher speeds and symmetrical speeds…it’s going to be fiber.”
The cable broadband industry faces an onslaught of criticism from fiber advocates. Organizations like the Fiber Broadband Association say their preferred technology performs better, last longer, and costs less in the long term than the competition. FBA President Gary Bolton has strongly opposed government support for all manner of non-fiber technology, including satellite and wireless.
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References:
https://www.lightreading.com/cable-tech/cable-business-services-bounce-back/d/d-id/782175
Cable Providers Back Hybrid Fiber-Coax Networks in Face of Pure Fiber
MoffettNathanson: Fiber Bubble May Pop; AT&T is by far the largest (fiber) overbuilder in U.S.
Fiber network build-outs are still going strong, even as the pace of those builds slowed a bit in 2022. Our colleague Craig Moffett warns that the fiber future isn’t looking quite as bright due to an emerging set of economic challenges that could reduce the overall rate of return on those build-outs. Rising costs, reflecting labor cost inflation, equipment cost inflation, and higher cost of capital, all point to diminished investment returns for fiber overbuilds. Craig wrote in a note to clients:
Our by-now familiar tally of planned competitive fiber builds for 2022 started the year at to 6M or so homes passed. By early Spring it had climbed to 7M. It currently sits at ~8M. Next year’s number is flirting with 10M. All for an industry that has never built even half that many in a single year. As we approach the end of the year, however, it is clear that the actual number, at least for this year, will fall short. The number is still high, to be sure… but lower.
There does not appear to be a single explanation for the construction shortfall; some operators blame labor supply, some permitting delays. And some, of course, are actually doing just fine. For the industry as a whole, however, notably including AT&T, by far the nation’s largest (fiber) overbuilder, the number will almost certainly end the year meaningfully below plan. Costs appear to be rising, as well. Here again, there is no single explanation. Labor costs are frequently cited, but equipment costs are rising as well. For example, despite construction shortfalls, AT&T’s capital spending show no such shortfall, suggesting higher cost per home passed. Higher cost per home passed, coupled with a higher cost of capital, portend lower returns on invested capital.
If, as we expect, investment returns for fiber overbuilds increasingly prove to be inadequate, the capital markets will eventually withdraw funding. Indeed, this is how all bubbles ultimately pop. There are already signs of growing hesitancy. To be sure, we don’t expect a near-term curtailment; operators’ plans for the next year or two are largely locked in. Our skepticism is instead about longer-term projections that call for as much as 70% of the country to be overbuilt by fiber. We believe those kinds of forecasts are badly overstated.
As recent as its Q3 2022 earnings call, AT&T has reiterated that it’s on track to expand its fiber footprint to more than 30 million locations by 2025. The company deployed fiber to about 2.3 million locations through the third quarter of this year, but appears hard-pressed to meet its guidance to build 3.5 million to 4 million fiber locations per year.
Given that the fourth quarter is typically a slow construction period, AT&T “looks to be well behind its deployment goals,” Moffett wrote. “If the company retains the pace of deployment in Q3, they will end the year 675K homes short of their goal, or an 18% shortfall compared to the midpoint of their target.”
But AT&T isn’t alone. Lumen has also fallen behind its target, as has TDS and altafiber (formerly Cincinnati Bell) and Altice USA. Those on track or ahead of pace include Frontier Communications, Consolidated Communications and Verizon.
The analysts at Wells Fargo recently lowered their fiber buildout forecasts for 2022 and 2023. They cut their 2022 forecast for the US to about 8 million new fiber locations, down from 9 million. For 2023, they expect the industry to build about 10 million locations, cut from a previous expectation of 11 million.
Though overall buildout figures are still relatively high, some operators recently have blamed a blend of reasons for the recent slowdown in pace, including a challenging labor supply, permitting delays and rising costs for capital and equipment.
“Labor costs are frequently cited, but equipment costs are rising as well,” Moffett noted. “For example, despite construction shortfalls, AT&T’s capital spending show no such shortfall, suggesting higher cost per home passed.”
And, like the pace of buildouts, the cost situation is clearly not the same for all operators. While Consolidated is seeing the cost per home passed rising to a range of $600 to $650 (up from $550 to $600), Frontier expects its costs to remain at the expected range of $900 to $1,000.
But more generally, Moffett believes the returns on those investments “will only weaken further as buildouts are necessarily pushed out to less attractive, lower density, markets.”
One takeaway from that, Craig warns, is that fiber overbuilding is poised not only to generate lower returns that originally hoped, but that there also will be upward, not downward, pressure on broadband prices.
With respect to the pace of fiber build-outs, there’s heavy demand for labor for today’s overbuilding plans, and it will only get heavier as the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program gets started.
Remedies are out there, with Moffett pointing to the Fiber Broadband Association’s rollout of its OpTICs Path fiber technician training program earlier this year as one example. ATX Networks, a network tech supplier, is contributing with the recent launch of a Field Personnel Replenishment Program.
But they might not completely bridge the gap. “These efforts may help expand capacity, but they are unlikely to fully meet demand, and they are almost certainly not going to forestall near-term labor cost inflation, in our view,” Moffett wrote.
With rising equipment costs and the cost of capital also factoring in, Moffett views a 20% rise in fiber deployment (for both passing and connecting homes) a “reasonable range” in the coming two to three years.
Moffett wonders if network operators will be forced to raise prices to help restore returns to the levels anticipated when fiber buildout plans were first conceived. While it’s unclear if competitive dynamics will allow for that, “it does appear to us that expectations of falling ARPU [average revenue per user] are misplaced,” Craig wrote.
But the mix of higher cost of capital and deployment for fiber projects, paired with deployment in lower density markets or those with more buried infrastructure, stand to reduce the value of such fiber projects further.
“Capital markets will sniff out this dynamic long before the companies themselves do, and they will withdraw capital. This is, of course, how bubbles are popped,” Moffett warned.
The MoffettNathanson’s report also provided an update on broadband subscriber metrics. US cable turned in a modest gain of 38,000 broadband subs in Q3 2022, an improvement from cable’s first-ever negative result in Q2. Cable saw broadband subscriber growth of 1.2% in Q3, down from +4.4% in the year-ago quarter. U.S. telcos saw broadband subscriber growth fall to -0.5% in Q3, versus +.06% in the year-ago quarter.
Meanwhile, fixed wireless additions set a new record thanks to continued growth at both Verizon and T-Mobile. However, T-Mobile’s 5G Home business posted 578,000 FWA subscriber adds in Q3, up just 3.2% from the prior quarter.
References:
Frontier’s Big Fiber Build-Out Continued in Q3-2022 with 351,000 fiber optic premises added
Frontier Communicatons massive fiber build-out continued in the third quarter (Q3-2022), as the company added record number of fiber subscribers to reach a total of 4.8M fiber locations. Frontier is poised to reach 5 million locations passed with fiber-to-the-premises (FTTP) networks this month, putting it at the halfway point toward a goal to reach at least 10 million locations with fiber by the end of 2025. The company added a record 64,000 fiber subscribers, beating the 57,000 expected by analysts. That helped to offset greater than expected copper subscriber losses of -58,000. Consumer fiber Q3 revenue climbed 14% to $424 million while consumer copper fiber dropped 3% to $361 million.
Frontier built FTTP to a record 351,000 fiber optic premises in Q3-2022, handily beating the 185,000 built out in the year-ago quarter and the 281,000 built in Q2 2022. Frontier ended Q3 with 1.50 million fiber subs, up 16% versus the year-ago quarter.
“We delivered another quarter of record-breaking operational results,” said Nick Jeffery, President and Chief Executive Officer of Frontier. “Our team set a new pace for building and selling fiber this quarter. At the same time, we radically simplified our business and delivered significant cost savings ahead of plan. This is a sign of a successful turnaround.
“Our team has rallied around our purpose of Building Gigabit America and is laser-focused on executing our fiber-first strategy. As the second-largest fiber builder and the largest pure-play fiber provider in the country, we are well-positioned to win.”
Third-quarter 2022 Highlights:
- Built fiber to a record 351,000 locations to reach a total of 4.8 million fiber locations, nearly halfway to our target of 10 million fiber locations
- Added a record 66,000 fiber broadband customers, resulting in fiber broadband customer growth of 15.8% compared with the third quarter of 2021
- Revenue of $1.44 billion, net income of $120 million, and Adjusted EBITDA of $508 million
- Capital expenditures of $772 million, including $18 million of subsidy-related build capital expenditures, $442 million of non-subsidy-related build capital expenditures, and $170 million of customer-acquisition capital expenditures.
- Net cash from operations of $284 million, driven by healthy operating performance and increased focus on working capital management
- Nearly achieved our $250 million gross annual cost savings target more than one year ahead of plan, enabling us to raise our target to $400 million by the end of 2024
In Frontier’s “base” fiber footprint of 3.2 million homes (in more mature areas where fiber’s been available for several years), penetration rose 30 basis points in Q3 to 42.9%. “When we look at the growth over the past year, we see a clear path to achieving our long term target of 45% penetration in our base markets,” Frontier CEO Nick Jeffery said.
Penetration rates in Frontier’s expansion fiber footprint for the 2021 cohort is on target and is exceeding expectations in the 2020 expansion fiber footprint, he said.
Fiber ARPU (average revenue per user) was up 2.6% year-over-year, but came a little short of expectations thanks in part to gift card promotions. Frontier’s consumer fiber ARPU, at $62.97, missed New Street Research’s expectation of $63.67 and a consensus estimate of $64.51. Copper ARPU, however, beat estimates: $49.65 versus an expected $48.57.
Frontier CEO Jeffery said faster speeds remain a top ARPU driver, with 45% to 50% of new fiber subs selecting tiers offering speeds of 1Gbit/s or more. Fiber subs taking speeds of 1Gbit/s or more now make up 15% to 20% of Frontier’s base, up from 10% to 15% last quarter, he said.
Frontier currently has no plans to raise prices due to inflation and other economic pressures, but the company left the door open to such a move.
“We’ll be a rational pricing actor in this market,” Jeffery said. “If those [inflationary pressures] don’t moderate, then of course we maybe consider pricing actions to compensate…just as we’re seeing others doing.”
Frontier also has no immediate plans to strike an MVNO deal that would enable it to use mobile in a bundle to help gain and retain broadband subscribers – a playbook already in use by Comcast, Charter Communications, WideOpenWest and Altice USA.
As churn rates remain stable and low, Jeffery explained, “the argument for using some of that scarce capital to divert into an MVNO to solve a problem that we don’t yet have, I think, would probably not make our shareholders super happy.” Importantly, Frontier has experience in the mobile area from execs who previously worked at Vodafone, Verizon and AT&T.
“We’re watching it very closely and if consumer behavior changes or if the market changes in a material way that impacts us such that moving some of our scarce capital to build or partner with an MVNO would be a smart thing to do, we’ll do it and we’ll do it very quickly,” Jeffery said. “But now isn’t the moment for us.”
Frontier ended the quarter with $3.3 billion of liquidity to fund its fiber build. Beasley said Frontier has additional options if needed, including taking on more debt, selling non-core real estate assets, access to government subsidies and the benefits of a cost-savings plan that has exceeded the target (from an original $250 million to $400 million).
References:
The conference call webcast and presentation materials are accessible through Frontier’s Investor Relations website and will remain archived at that location.
https://events.q4inc.com/attendee/387527166
https://www.lightreading.com/broadband/frontiers-big-fiber-build-nears-halfway-point-/d/d-id/781503?
Clearwave Fiber Expands Fiber Buildout in Savannah, Hinesville and Richmond Hill, GA
Clearwave Fiber [1.] continues its construction of a state-of-the art, all-Fiber Internet network in the “Coastal Empire.” This latest expansion for the Savannah-based operation marks a continuation of almost 6,000 route miles of Fiber in the Southeast and Midwest. The company’s goal is to bring the most advanced and fastest Internet available to more than 500,000 homes and businesses across the United States by the end of 2026.
Note 1. Clearwave Fiber was formed in January of 2022 as a rebranding of Hargray Fiber, which has been serving the Southeast for 70+ years. Senior leadership and operations management have a long history with Hargray and now lead Clearwave Fiber during this rapid expansion.
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“Clearwave Fiber is excited to contribute to the continual growth in Southeast Georgia and provide such a crucial resource to residents and commercial operations,” said Clearwave Fiber General Manager John Robertson. “We’re committed to providing communities with the high-speed connectivity that is essential for families, businesses and local economies.”
“We’re ingrained in the fabric of Savannah and its surrounding communities,” said Clearwave Fiber Chief Operating Officer Gwynne Lastinger. “Our sales and technical support staff live and work in the Coastal Empire and we continue to add to our team of more than 500 throughout the Southeast and Midwest.”
With gigabit download and upload speeds, Clearwave Fiber will bring 10 times more speed to consumer doorsteps at a time when fast, reliable Internet is becoming increasingly critical to modern households and businesses. Remote work, streaming, gaming, smart home technology and multiple device connectivity all require robust, reliable connections. Clearwave Fiber is committed to providing hassle-free, high-quality Fiber data connection to every location of its growing footprint.
“We’re seeing an increase in households where multiple online activities are occurring at the same time. Many Internet connections aren’t up to the task of keeping it all running at top speeds,” said Robertson. “Clearwave Fiber solves the problem of the bandwidth issues that happen when everyone in the house is connected. We also have solutions for businesses that keep them operating on a fast, reliable network.”
For many consumers, Internet touches every facet of daily life. Remote work, telehealth, and virtual learning all require robust, reliable connections. A 2022 study by Deloitte indicated that 45 percent of surveyed households include one or more remote workers, and 23 percent include at least one or more household member attending school from home. Additionally, 49 percent of U.S. adults had virtual medical appointments in the past year.
In addition, the Deloitte report noted that the average U.S. household now utilizes a total of 22 connected devices, including laptops, tablets, smartphones, smart TVs, game consoles, home concierge systems like Amazon Echo and Google Nest, fitness trackers, camera and security systems, and smart home devices such as connected exercise machines and thermostats.
Supporting this burgeoning ecosystem of household devices can challenge companies serving customers over DSL or cable systems. “Older copper wire and coaxial networks worked just fine for the technologies they were built for. Copper lines are great for telephone calls and coax worked well for cable TV, but those networks struggle to deliver the kind of bandwidth possible with fiber,” noted Lastinger. “Fiber optic technology is the future. Fiber networks are more durable, more consistent, and they move data at the speed of light. Best of all, our network easily keeps pace with technology innovations, exponentially increasing demands for bandwidth, and evolving customer needs. The options are almost limitless.”
Fiber networks are currently being installed on Wilmington and Whitemarsh Islands, Windsor Forest, Hinesville, Rincon, Pooler and Richmond Hill. Clearwave Fiber is scheduled to complete these projects by the end of November and will continue working in other areas in the region into 2023 and beyond.
For more information, visit ClearwaveFiber.com
References:
Chile’s Entel to sell fiber optic assets for $358 million to ON*NET Fibra
Chilean telecoms giant Entel (which this author consulted for in 2002 and 2005) said on Saturday it would sell the assets of its fiber optic business, which provides services to homes, to local company ON*NET Fibra (?) in a deal worth $358 million.
The sale, led by investment banks BNP Paribas, Santander and financial adviser Scotiabank, is subject to approval by Chile’s economic regulator, expected in the first half of 2023.
Entel and ON*NET Fibra signed an agreement as part of the deal that will enable Entel to continue offering internet services for residences on ON*NET’s network, Entel said in a statement.
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“By selling our network, rather than leaving the fixed market, we are increasing coverage rapidly to offer our internet services to the home at efficient costs and without the need to invest the sums required for a fiber deployment with this coverage,” the statement added.
Following the closing of this transaction, ON*NET Fibra is expected to reach more than 4.3 million homes in 2024. Entel has operations in Chile and Peru and has more than 20 million mobile subscribers.
Source: ON*NET Fibra
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References:
California begins construction of $3.8B middle mile fiber network
California began work on an ambitious fiber project which aims to deliver statewide open access middle mile connectivity by the end of 2026. The project, which was announced in 2021, is being fueled by $3.8 billion in federal and state funds.
The sate’s network design calls for a total of 10,000 miles of fiber. The largest portion of the project will run through San Bernadino County, which will be home to 850 miles of fiber. Kern County (544 miles), Riverside County (535 miles) and Los Angeles County (525 miles) will also account for substantial portions of the system.
California’s Department of Transportation (Caltrans) is working with the state’s Department of Technology to complete the project.
During a project meeting in September, Caltrans’ Acting Assistant Deputy Director for the Middle Mile Broadband Initiative Janice Benton said preconstruction work – including environmental, permitting and design tasks – was already underway for 93% of the project’s fiber miles.
She added 114 miles of the project are expected to go into construction in 2022, with another 300 miles to come in 2023. The first leg of its work got underway this week.
The state of California has already advertised contracts covering 900 miles of the project. And by October 14, it was planning to have 60% of the middle mile network out for construction bids. It is aiming to have 100% of the system under contract by May 2023.Once the network is complete, ISPs will be able to tap into it to provide last mile connectivity. Those efforts will also get a funding boost. The same 2021 legislation that allocated $3.25 billion for the middle mile project (which was subsequently supplemented by another $550 million from the 2022 state budget) also set aside $2 billion for the rollout of last mile connections.
The 10,000-mile “middle mile” network is expected to cost $3.8 billion and help connect the roughly one in five Californians do not have access to reliable and affordable high-speed internet.
“We are thrilled to see construction begin on the middle-mile network,” said Secretary Tong. “Too many rural and urban areas lack adequate broadband infrastructure, forcing residents to attempt to connect via mobile hotspots and unreliable satellite service, which leaves out too many Californians.”
Former Los Angeles Mayor Antonio Villaraigosa, who was named by the Governor in August to serve as Infrastructure Advisor to the State of California, joined the event Thursday to highlight the substantial federal resources coming to the state for infrastructure investments like broadband networks.
“This broadband network is one of the most ambitious and impactful infrastructure projects in California – and we’re thrilled that construction is underway starting today,” Mayor Villaraigosa said. “With billions more in federal infrastructure dollars on the way, we’re getting ready to celebrate many more groundbreakings for innovative projects across California. This goes far beyond infrastructure, this is about building the future of our state and creating thousands of good-paying jobs along the way.”
CDT Director Liana Bailey-Crimmins said construction on the first segment of the Middle Mile network follows more than a year of planning.
“The rapid planning by the Middle Mile team as well as our local partners is coming to fruition. It’s wonderful to see the hard work paying off, to make a difference in the lives of Californians who live in unserved areas like this one.”
Caltrans Director Tony Tavares said each of the Department’s 12 districts is working to build segments of the Middle Mile network on an ambitious timeline in the hope of capturing the maximum amount of federal funding available.
“This project provides a wonderful opportunity for us to ‘dig smart’ and highlights the benefits of coordination among state agencies and with our local partners. Caltrans is proud to partner with the Department of Technology to create a broadband Middle Mile network, providing equitable, high-speed broadband service to all Californians.”
Once the Middle Mile network is complete, local carriers will have access to the network to provide communities with direct service to homes and businesses as well as reduced-cost or free broadband internet service for those who are eligible.
References:
https://www.fiercetelecom.com/telecom/california-kicks-construction-38b-middle-mile-fiber-network
New Hampshire Electric Cooperative and Conexon to deliver FTTH internet service to thousands of NH homes and businesses
Conexon, a rural fiber-optic network design and construction management leader, and New Hampshire Electric Cooperative (NHEC) are expanding their partnership to bring fiber-to-the-home (FTTH) service across the cooperative’s territory.
NHEC and Conexon have worked together to provide gigabit-speed internet access to two communities, Acworth and Sandwich, and will soon expand to 32 communities throughout Grafton County. NH Broadband, the co-op’s fiber subsidiary, will ultimately offer high-speed fiber internet service that spans nine counties and nearly 120 communities. Service is available today for customers in Acworth, Sandwich, Clarksville, Colebrook, Lempster and Stewartstown, and is expected to be available to initial customers in Grafton County by First Quarter 2023.
Conexon provides a comprehensive range of fiber broadband services including network design, construction project management, engineering and operations support. Additionally, through its internet service provider subsidiary, Conexon Connect, the company is also providing services including customer sign-ups, installations, billing, technical support and access to multi-gigabit speed packages.
“Over the past several years, I’ve heard people analogize rural broadband to the rural electrification movement of the 1930s and 1940s,” Conexon Partner Jonathan Chambers said. “To us, it isn’t an analogy; it’s a reality. The same companies that built electric networks across the nation are building broadband networks. Alyssa Clemsen Roberts was one of the first to recognize how electric cooperatives could solve the digital divide. In fact, Alyssa introduced me to that very idea when I was at the FCC. She also introduced me to Randy Klindt. I’m thrilled Alyssa has joined NHEC and will lead this new endeavor.”
The lightning-fast fiber-optic network offered by NH Broadband will give members access to symmetrical multi-gigabit internet capabilities – among the fastest and most robust in the nation. Additionally, it will enable enhancements and smart grid capabilities to the electrical infrastructure, including improved power outage response times, better load balancing and more efficient electricity delivery.
“Making high-speed, affordable internet available to all of our members who need it is a major undertaking, on par with the effort to bring light and power to these same locations more than 80 years ago,” NHEC President/CEO Alyssa Clemsen Roberts said. “We’re thrilled to have Conexon’s resources and experience available as we work to bring this next essential service to our members.”
Conexon brings to the project unmatched experience and expertise in deploying rural FTTH networks. The company has designed more than 200,000 miles of fiber for cooperative projects and builds more than 50,000 fiber miles of fiber annually. In addition, Conexon has created a broad ecosystem of equipment and labor resources specializing in rural fiber builds. Since forming six years ago, Conexon has assisted nearly 275 electric cooperatives, 75 of which are deploying fiber networks, with more than 500,000 connected fiber-to-the-home subscribers across the U.S.
“We’re excited to build on our current relationship with New Hampshire Electric Cooperative and make a difference in the lives of even more residents who are currently unserved or underserved with broadband,” Conexon Founding Partner Randy Klindt said. “We are pleased to have such a positive and productive partnership with Alyssa and her team, one that enables us to further our mission of closing the digital divide.”
New Hampshire Electric Cooperative is a member-owned not-for-profit electric utility, headquartered in Plymouth, N.H. NHEC connects its 85,000 members through 6,000 miles of energized lines, crossing 118 communities throughout New Hampshire.
Conexon works with Rural Electric Cooperatives to bring fiber to the home in rural communities. The company is comprised of professionals who have worked in electric cooperatives and the telecommunications industry, and offer decades of individual experience in business planning, building networks, marketing and selling telecommunications. Conexon offers its electric cooperative clients end-to-end broadband deployment and operations support, from a project’s conception all the way through to its long-term sustainability. It works with clients to analyze economic feasibility, secure financing, design the network, manage construction, provide operational support, optimize business performance and determine optimal partnerships. To date, Conexon has assisted more than 275 electric cooperatives, 75 of which are deploying fiber networks, with more than 500,000 rural Americans connected to fiber to the home. The company has secured nearly $2 billion in federal, state and local grants and subsidies for its clients.
Cindy Parks
913-526-6912
[email protected]
SOURCE Conexon
AT&T CEO at Goldman Sachs Conference: Fiber and 5G are huge growth drivers
AT&T CEO recently spoke at the Goldman Sachs Communicopia + Technology Conference. Stankey reiterated that AT&T continues to take a disciplined and return-focused approach to growth and investment and made the following points:
- The company continues to add customers in its strategic focus areas of 5G and fiber. Stankey shared he feels comfortable with AT&T’s business trajectory and the continued customer demand it is seeing. Overall industry postpaid phone volumes remain healthy, and AT&T’s consistent go-to-market approach, along with an improved customer experience, is attracting high-value customers. That’s in sharp contrast to Verizon which is losing post paid mobile customers. “We are still going to have a negative net adds on phones in the third quarter,” Verizon CEO Hans Vestberg said Wednesday at the Goldman event.
- Stankey said AT&T is developing diversified sources of growth, with wireless share gain in specific customer cohorts, such as the public sector and large and mid-sized business. He expects this momentum to continue thanks to a strong distribution ecosystem, a high-performing workforce and enhanced network quality strengthened by recent mid-band 5G spectrum deployments. He also added that recent pricing actions are performing as anticipated, supporting the company’s view that these actions will be accretive in the latter half of the year.
- Stankey shared that AT&T Fiber continues to deliver the best customer experience in the marketplace and that he’s pleased with the penetration rates for new fiber build. As AT&T expands to new markets, the company has seen first-year penetration rates about two times greater than historical norms. Stankey expects subscriber momentum and current penetration rates to continue based on the company’s improved ability to build fiber effectively and the strong customer demand for the product. Fiber ARPU continues to grow, and the company is seeing higher than anticipated uptake of its multi-gig fiber offerings.
- At the end of the last quarter, AT&T had over 6.5 million fiber customers. The company continues to expand its fiber footprint and has the ability to serve 18 million customer locations in more than 100 metro areas with AT&T Fiber. Stankey shared there may be an opportunity to expand the company’s fiber footprint based on the attractiveness of returns and that government subsidies supporting public-private partnership are expected to help drive broadband expansion.
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There are three major sensitivities in a fiber business case. One is the rate of penetration, one is the ARPU and one is the cost to build. Cost to build isn’t going to move dramatically typically speaking. Nobody is going to come out with a new way to put fiber out that takes 30% out of the cost of building fiber. It uses relatively mature technologies like digging trenches that aren’t going to see that kind of rapid change. ARPUs are not only strong. They’re stronger than what we expected. We’re seeing higher uptakes when we offer 5 gig in the market than what we would have expected when we put a 5-gig product out there. And if the rate of penetration is twice as fast as we expected, that will tell you that there are homes that in previously, two years ago when we did this, we said maybe weren’t economical that now because of our execution in the market and we sustain that become economical.
Second point, government has brought in a pretty substantial amount of public subsidy, $45 billion-ish. And remember, that’s just the public portion of the subsidy. What people miss is nobody expects that when one of those locations get built, that it’s going to be done on a 100% public financing, it’s going to be done on a public private partnership.
And right now, on public monies that are coming in, for example, when we’re participating, oftentimes, $3 of private capital come in to match $1 of public capital. I don’t expect that, that ratio will probably hold as we get to some of these more difficult areas to build. But $45 billion, if it’s 1:1, could be $90 billion, right? And when you start thinking about that dynamic of how that opens up an opportunity in the market previously uneconomic areas to build. If that starts to work its way through the process next year, I would expect that AT&T is going to be an active participant in that process. And we’re going to look at it based on what I described earlier is we’re looking at places where we’re turning down existing copper infrastructure, where we have opportunity to keep scale and go in and fill in holds, that’s going to naturally cause us to lean in to doing some of that stuff going forward. And I would expect that will probably alter the number.
And then finally, I think we’re in a place in the market right now, where I believe all the fundamentals are that customers need more skilled connectivity in their home. And if I look out over five years, and I think about building a durable and sustainable franchise at AT&T, I think fiber is a key element to that.
- Fiber is also a key element for getting the kind of dense infrastructure that’s necessary for the next generation of wireless technology for backhaul. And having that owned and operated economics where you’ve got that backhaul and that transport densely out on a network is going to be a key determiner being a successful wireless business over time. And so when I step back and I think about that opportunity right now, are there other markets maybe outside of our operating footprint, given our success and what we’re seeing in rate of penetration, receptivity of the product, our ability to cross-sell both fixed and wireless, we should understand whether or not there’s something there.
- AT&T has been deploying their mid-band spectrum. We were a little bit later to that dynamic than some in the industry because of where we were in the auction and equipment availability. It is now up and starting to make its appearance. In metropolitan areas, the performance we’re getting out of it is really, really good. I think that will be a big lift on what is already a strong network.
- The CEO says AT&T has the best performing 4G LTE network in the country now paired with what we can do in 5G mid-band spectrum, I think that’s only going to be a positive for customers as we move through this.
- AT&T remains focused on its cost transformation program and its efforts to achieve more than $4 billion of its $6 billion run-rate cost savings target by the end of the year. Stankey noted that he’s comfortable with AT&T’s cost structure, and believes the company can continue to drive out costs as it exits portions of its legacy businesses. This includes efforts to transition from its legacy copper network to fiber.
- Stankey shared that AT&T is investing at a record clip to fuel growth in core connectivity, while continuing to pay an attractive dividend, and that the company is focused on building a sustainable and durable connectivity operation with improved cash generation. AT&T is pleased with the return profile of its fiber and 5G investments and continues to expect 2022 and 2023 to be the peak of this capital investment cycle with capital intensity moderating in 2024 and beyond. Overall, the company’s long-term capital allocation priorities remain unchanged, and it expects to use cash after dividends to reduce debt with a goal of reaching a net debt-to-adjusted EBITDA range of 2.5x.
References:
AT&T CEO Updates Shareholders at Goldman Sachs Communicopia + Technology Conference | Business Wire
Altice USA bets on FTTP with multi-gigabit speeds by 2025; MVNO with T-Mobile
Dexter Goei, Altice USA’s outgoing CEO, continues to strongly defend the company’s decision to upgrade large portions of its network to fiber, stating that the product and business performance of the move make dollars and sense. Altice USA’s current plan is to upgrade about 6.5 million passings to fiber-to-the-premises (FTTP) by 2025 and back that up with multi-gigabit speeds, which Altice USA has begun to soft-launch in parts of its fiber upgrade areas.
At the Goldman Sachs Communacopia + Technology conference in San Francisco, Goei said while the company has made strides in deploying its fiber network — it expects to finish 2022 with up to 2.3 million homes passed with the technology — it is still seeing customer declines in its former Cablevision and Suddenlink footprints.
In Altice’s former Cablevision systems in metropolitan New York City, gross additions are lower, there is less move activity and churn levels are low, but the company also is competing against a telco — Verizon Communications — that has been extremely aggressive on price. In its Suddenlink markets mainly in the Midwest, gross addition activity is high but churn is high, especially in markets where it is being overbuilt.
“We’re still losing subs in both markets but for different reasons,” Goei said. “We feel good about the fourth quarter turning around and looking better next year.”
Altice USA lost about 3,000 subscribers in 2021 — the only major cable operator to do so — and shed more than 50,000 broadband customers in the first half of this year.
Altice began accelerating its fiber rollout last year, with a goal of passing 6.5 million homes by 2025. At the Goldman conference, Goei said the company expects to end 2022 with 2.2 million to 2.3 million homes passed with fiber (an increase of about 1 million homes), and should add another 1.6 million to 1.8 million households by the end of 2023.
While other cable operators have seen an increase in competition from fixed wireless access providers from telcos, Goei said most of Altice USA’s telco competition is replacing slower DSL lines with fiber, hence the acceleration of its own fiber buildout plans. But he shared his peers’ disdain for fixed wireless access (FWA), agreeing with some pundit predictions that the technology will reach a performance and penetration plateau in the next two or three years.
Goei announced his intention to step down as CEO earlier this month, and will become executive chairman of Altice USA on October 3. In his place the company named Comcast executive Dennis Mathew as CEO, also effective October 3. Mathew has 17 years of experience with Comcast, most recently as senior VP of its Freedom Region (Southeast Pennsylvania, New Jersey and Northern Delaware). He earlier served as senior VP for its Western New England Region (Connecticut, Vermont, Western Massachusetts and areas of New York and New Hampshire) and has extensive experience in running cable businesses.
Goei said at the Goldman conference that his main motivation for stepping down was a desire to return to Europe, where he spent his childhood and most of his professional career, with his family. He added that he notified the Altice USA board of his decision about a year ago, starting the search process for a replacement about six months ago. He believes he’s leaving Altice USA in capable hands.
“I interviewed many, many people during the process; Dennis fits the bill across the board,” Goei said, adding that Mathew has a proven track record in operations, running one of Comcast’s most high-profile regions (the Freedom Region) and will fit in well with the Altice team. “He’s just a great guy, a team player, will focus on the prize and is someone who would do very well with the executive team at Altice USA.”
The average revenues per user (ARPU) on Altice USA’s fiber-based products are 7% to 8% higher than ARPU on cable-based services, he said. Additionally, churn rates on fiber services are also coming in about 6% to 8% lower than on HFC, and the NPS (net promoter score) for the fiber product is also coming in higher.
“Every single metric that you can imagine – that you would anticipate – are better” on the fiber product, Goei said. He acknowledged, however, that the installation process for fiber customers getting a triple-play bundle that includes pay-TV and voice could be better.
As for Altice USA’s fiber network build update, the company finished almost 270,000 new homes in the second quarter of 2022, a record the company expects to beat in Q3 and, weather permitting, in Q4.
For 2022, Altice USA expects to complete an additional 1 million fiber passings, with 1.2 million as its “stretch target.” That will put Altice USA in a position to end the year with 2.2 million to 2.3 million homes passed with fiber.
In 2023, Goei said Altice USA expects to ratchet up the build to 1.6 million to 1.8 million homes passed as the operator starts to push fiber upgrades into the Suddenlink footprint.
Altice USA is also doing edge-out builds to areas adjacent to existing facilities and pursuing grants for fiber builds in underserved and unserved areas. Altice USA has won grants or subsidies covering 40,000 to 45,000 homes, a number that Goei predicts could rise to about 200,000 in the next 12 to 24 months.
Altice USA, which has been fielding M&A inquiries about the Suddenlink properties, believes its fiber focus will set the stage for a return to broadband subscriber growth as early as Q4 2022, and certainly by sometime in 2023.
Goei said 80% of gross broadband subscriber adds in fiber areas take a fiber-based service. Though Altice USA is trying to convert HFC customers to fiber proactively, exceptions include customers who want to keep their existing setup or who are in homes and locations where a landlord won’t allow a new fiber drop.
Altice USA has been building a fiber broadband network in its Optimum territory in the New York tri-state area (New York, New Jersey, Connecticut) with 1.2 million fiber passings available for sales as of December 31, 2021. For Suddenlink, construction is expected to begin this year in areas of Texas. Additional states in the Suddenlink footprint that will benefit from this fiber expansion plan include areas of Arizona, California, Louisiana, Missouri, North Carolina, New Mexico, Oklahoma, and West Virginia.
“Altice USA is proud to announce plans to invest further in our fiber deployment strategy by accelerating the build of a 100% fiber broadband network capable of delivering multi-gig speeds across our Optimum and Suddenlink footprint,” said Dexter Goei, Altice USA Chief Executive Officer. “Fiber is the future and given the progress we have made at Optimum with our fiber expansion, we’re excited to build on that success and break ground later this year at Suddenlink to bring our advanced network to more customers and communities.”
Goei touched briefly on Altice USA’s Optimum Mobile product, which is supported by an MVNO deal with T-Mobile. He agreed that there are benefits to bundling mobile with home broadband but lamented that mobile EBIDTA is challenged by “thin margins” being driven by a mobile marketplace that’s seeing falling ARPU and rising levels of promotions.
With that backdrop, Altice USA expects to market fiber more aggressively than mobile this year and into 2023. “For the balance of this year, I don’t think you should expect real big waves in the mobile product,” Goei said.
Goei also offered some additional commentary on the recent announcement that he will be stepping down as CEO to become executive chairman of the board. Comcast exec Dennis Mathew has been tapped to take the CEO slot effective October 3.
Goei reiterated that he is shifting gears for personal reasons, as he and his family want to return to Europe. He said he informed the board of his decision about a year ago. Altice USA started its CEO search roughly six months ago.
In his new role, Goei said he will focus on “large strategic stuff” and external elements such as government affairs and conversations with the financial community, so that Mathew can focus squarely on operations.
References:
AT&T remains a fiber first network provider with FWA in rural areas
AT&T remains a fiber-first broadband broadband network provider. The carrier’s CFO Pascal Desroches told investors that the most likely instance for AT&T to use FWA (fixed wireless access) would be in rural areas where deploying fiber could prove too costly.
“We think in certain instances FWA makes sense,” Desroches said during an interview at this week’s Bank of America Media, Communications, and Entertainment Conference, according to a transcript. “If you’re in a rural area where it does make – where the economics don’t pan out for fiber, fixed wireless will be an interesting solution.”
AT&T’s transition end game is predicated on the carrier’s belief that fiber is a better long-term solution for customers and its operations. Desroches explained that FWA extracts a “very expensive” toll on the carrier’s mobile operations.
“Long term, we don’t believe it will be good enough,” Desroches said of FWA. “And that’s why we think it is really important to start to place our bets now with fiber because by the time fiber becomes the only acceptable solution, it will be too late to start to build out because of the long lead times.”
Editor’s Note: This is what investors are missing about AT&T – it’s growing fiber footprint (#1 in the U.S.) which is probably the biggest growth area in all of telecom!!!
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“With connectivity increasing at what we estimate will be a fivefold increase between 2021 and 2025, fiber will be the solution of choice. And given the long lead times, the long payback periods, if you decide you want to do fiber 4 to 5 years from now, it’s too late. And this is why we think we are building a strategy for long-term sustainable earnings with the best possible technology.”
To support that need, AT&T recently signed a long-term deal with fiber builder Corning, which is using that deal as the basis to build a new cable manufacturing facility in Gilbert, Arizona. AT&T also formed a “Fiber Optic Training Program” with Corning targeted at training 50,000 people to design, install, and maintain fiber networks.
“This investment is a significant step forward for our country and building world-class broadband networks that will help narrow the nation’s digital divide,” AT&T CEO John Stankey noted in a statement tied to the Corning deal. “This new facility will provide additional optical cable capacity to meet the record demand the industry is seeing for fast, reliable connectivity.”
“The market demand remains really healthy. We’re continuing to see good demand for subscriber — for new subscribers coming into the service. And also, look, our churn levels are at really low levels. You look at all that together, we have a mobility business now that we expect service revenues to grow 4.5% to 5%. And we expect profitability to accelerate in the back half of the year. So all indications are green and that we are performing really well.”
“We’re going to be competitive. For years, AT&T was not competitive, and we’re going to be competitive, and we’re capitalists. At the end of the day, if there are opportunities to grow subscribers in a more efficient way, we’re going to seize those. But at the same time, we’re no longer going to be the share donor to the industry.”
“We have relationships with virtually over 90% of the Fortune 1000. And it’s a core competency that we have, and it’s one that has served us well. But it is very much in transition, and we’re — what we have to do is to grow our small, mid-business connectivity solutions.”
“There will be a very attractive market for 5G-enabled IoT solutions. There is — it will come. It is nascent today. It will come and the relationships that we have among the Fortune 1000 is critical to — is critical in serving — in helping exploit that opportunity. And again, our wireless relationships. The big part of the growth in wireless is also the ability to surgically attack our enterprise base and partner with different organizations to really drive increased subscriber adoption.”
References:
Corning to Build New Fiber Optic Plant in Phoenix, AZ for AT&T Fiber Network Expansion
AT&T continues to add customers in key focus areas- 5G and fiber
AT&T added 813K mobile postpaid subscribers & >300K net fiber subs during 2Q-2022